ID 5210037 SEC 404
Individual Case Analysis: Acer America
I. Strategic Profile and Case Analysis Purpose
The company was established in 1976 and began to expand internationally in the mid-1980s through strategic alliances. They’ve changed organizational concept into “client-server” model where the strategic business units (SBUs) and regional business units (RBUs) were given greater freedom to manage its unit locally. This led the company evolves towards a federation of locally responsive units close to their markets yet linked by the emerging Acer brand.
In 1994, a U.S. based sourcing company; Acer America (AAC) foresees the opportunity to create a home PC ...view middle of the document...
Besides the design, the marketing strategy including positioning, pricing, promotion also varied and the success of these various approaches was mixed.
Over two and a half years, the once-promising new product had generated losses of almost $100 million in AAC and its share of the home PC market had fallen from almost 14% to less than 5% by the end of 1997.
What continuing role, if any, should Aspire have in Acer’s product line?
Was it time to rethink the networked organization model Shih had rolled out as his innovative “client- server” concept? If so, how should he redefined the roles, responsibilities and operating relationships of Acer’s SBUs and RBUs?
II. Situational Analysis
B. Industry Analysis: Porter’s five forces analysis in personal computer industry
1. Threat of New Entrants
The threat of new entrants is low because of high cost in implementing the business related to technology innovation, the standard of the product, customer’s loyalty. These factors can discourage newly entrants as it’s very difficult to achieve cost leadership or differentiation strategy in this industry if you’re a newcomer in this era.
2. Bargaining Power of Suppliers
The bargaining power of supplier is relatively low since Acer itself acts as OEM which originally manufactures some parts for its product and for other companies. Acer itself is also a large company so it can gain leverage on supplier more.
3. Bargaining Power of Buyers
The bargaining power of buyers is high because there are many brands that produce PC for customers to choose from. The switching cost is not much considered from the price of the product and information transferring from old one to new one. The product life of computers also shortened as customers likely to get better version in every couple of years.
4. Threat of Substitute Products
The threat of substitute products is moderately high as Apple introducing devices such as the iPhone and iPad that will challenge the need for a PC for some consumer segments couple with PDAs, laptops or even smart TV. However, PC is a type of computer that is suitable more than other types when using to perform tasks such as in Microsoft Excel, etc.
5. Intensity of Rivalry among Competitors
The intensity of rivalry is high as there are many major competitors compete in the market like IBM, HP, Compaq, etc. Since the product is rely on fast cycle market which means the product life cycle is very short due to technology innovation couple with increasing in using computers, it stimulates these companies to come up with new product all the time.
Overall, it’s quite attractive for Acer to establish the product under its brand name and should be able to survive in this industry but in order to obtain more market share and become one of the world’s top five brands, they must sustain their competitiveness as stated in the next topic.
D. Internal Analysis
One of its core competencies is the “fast food” model of...